CARES Act Paycheck Protection Program - HCA Healthcare
CARES ActPaycheck Protection ProgramApril 6, 2020The link to the recording is here. Use passcode nGZ39nRh to unlock.CONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Welcome! There is no hold music when your audio connects, so thank you for your patience.The presentation will begin shortly. ALL Attendee audio is muted. Use one of the 3 audio options: Call Using Computer (recommended option), CallMe (BEST telephone option), or Call In (MUST enter ATTENDEE ID) Chat to ALL PANELISTS. This session is being recorded.2CONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Welcome!Opening Remarks:Sandra Morgan, HCA SVP Physician and Provider Relations and Transfer CentersErik Larsen, HCA VP Special Assets3CONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
AgendaCARES Act Paycheck ProtectionProgram OverviewErik Larsen, HCA VP Special AssetsHow can this program help yourpractice and how do you apply?Erik LarsenAlice Heywood, HCA Senior Counsel, Legal DevelopmentPeter Rossell, HCA AVP Special AssetsRob Harris, Partner, Financial Services, Waller, Lansden, Dortch & Davis, LLPQuestions and AnswersDavid McMillan, Managing Principal, Consulting Services, PYA, PCDebbie Ernsberger, Principal, PYA, PC4Coming Soon: Medicare Acceleratedand Advance Payment ProgramWebinarErik LarsenConcluding Remarks andNext StepsSandra Morgan, HCA SVP Physician and Provider Relations and Transfer CentersSpecial Assets GroupCONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Paycheck ProtectionPlan OverviewErik Larsen5Special Assets GroupCONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Before We BeginDISCLAIMER: These slides and theinformation presented is as of April 6, 2020,and subject to revision and interpretationbased on pending rules and regulations. Inaddition, these slides and the informationpresented is only a summary of more detailedinformation and may not contain all theinformation that is important or relevant toyou. These slides and the informationpresented are solely for your information, andno representation or warranty, expressed orimplied is made. You should not place unduereliance on the accuracy, fairness orcompleteness of the information presented.6Special Assets GroupSCOPE: This HCA program is intended toassist independent physicians, including thoseon our medical staff, have access to hospitalmedical records or receive primary carephysician notifications, but not PSGphysicians. Our PSG physicians (bothemployed and foundation model) are likely noteligible to participate in the PPP loans or theMedicare Advance program based on theeligibility criteria for such programs. PSG isevaluating, however, and plans to pursue onbehalf of PSG any actionable programs.CONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Summary of Program and Key Loan TermsThe CARES Act is a 2 trillion economic stimulus package that includes 349 billion in Small Business Administration(SBA) 7(a) and SBA Express loans designated to keep staff employed and provide emergent liquidity to keep businessesof less than 500 employees from failing.The Paycheck Protection Program (PPP) provides federally guaranteed loans of up to 10 million and includes thepotential for partial or complete forgiveness of a loan, as long as employers maintain their payroll or restore their payrollsafterward and satisfy other criteria.7Loan Application As of April 3, applications for PPP loans for small businesses and sole proprietorships were made available through SBAauthorized lenders. As early as April 10, applications for PPP loans are available for submission specific to independentcontractors and self-employed individuals.Coverage Period Retroactive to February 15, 2020 and extends through June 30, 2020Maximum Loan Amount Equals the lesser of (i) 2.5x the average total monthly payroll costs from past year, or (ii) 10 millionUse of Proceeds Payroll costs, interest on mortgages, or other debts incurred before the covered period, rent and utilities (limitation of 25% for nonpayroll costs)Loan Terms 1.0% fixed interest rate 2-year term (only applies to unforgiven loan balance)Loan Deferral &Forgiveness Payment of principal, interest and fees will be deferred for 6 months; however, interest will continue to accrue over this period Up to 100% of the principal amount may be forgiven subject to proper documentation and may not apply to entire loan amount Not more than 25% of the forgiven amount may be for non-payroll costsSpecial Assets GroupCONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Latest Updates: Paycheck Protection Program Program went live Friday, April 3 for small businesses and sole proprietorships. Independent contractors and selfemployed can apply as early as April 10. SBA and Treasury have provided updated guidance through the weekend and promised more to come. Current program is 349B and first come, first served with some estimates for program demand in excess of 1Trillion, but the Treasury Secretary, Sen. Rubio and others have indicated support for expanding the program asneeded, but that would most likely require congressional action.o Wells Fargo reports having accepted their maximum allowable 10B in loan applicationso Band of America received over 99,000 applications for over 25B in loan volume in its first day8 Many lenders are still experiencing challenges going-live with technical glitches and incomplete rules from Treasuryand the SBA. Program started on Friday with existing SBA lenders, but regulators have created a simplified and acceleratedprocess for other lenders to join program. Many banks started with rules for prioritizing different groups of existing clients, which some have since relaxed,however all lenders are still subject to Bank Secrecy Act and Anti-Money Laundering regulations which will impacttiming for applicants establishing new lending relationships.Special Assets GroupCONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Needed Information for the ApplicationBorrower must complete an Application Form and provide payroll documentation and a good-faithcertification as to COVID-19 impact, use of funds, attestation of no other pending applications for acovered loan, and no duplicative funds received.To calculate eligible loan amount (Collect all source documentation): Payroll reports for 2019 and 2020 year-to-date for employees and officers that show:o Gross wageso Pay for family, medical, or sick leaveo March 31, 2020 and June 30,2020, when availableo State and local taxes assessed (form 940, 941 or 944)o Allowance for separation or dismissalo 1099s for independent contractors (if applicable) Completed 2019 tax return OR 2019 Profit and Loss Report and Balance Sheet Funds received in the form of an Economic Injury Disaster Loan from January 31, 2020 toApril 3, 2020 Payments for group health care benefits including premiums paid in 2019 to 2020 year-todate9Special Assets Group Quarterly IRS forms 940, 941 or944 for the following dates:o March 31, 2019 and June 30,2019o Paid time off/paid vacation Payment of any retirement benefits paid in 2019 and 2020 year-to-dateTo verify forgiveness amount: Documentation in the form ofcanceled checks, payment receiptsand bank statements showingpayment of the following items fromFeb. 15, 2020 to June 30, 2020:o Mortgage Interesto Rent paymentso UtilitiesCONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Is My Practice Eligible to Apply? An entity generally is eligible for the PPP if: (i) it was in operation on February 15, 2020and (ii) it, combined with its affiliates, is: A small business under existing SBA regulations, or Has 500 or fewer employees whose principal place of residence is the U.S. How do I count employees to be sure my practice qualifies? The number of employees is based on the average number of employees for each of the payperiods for the preceding completed 12 calendar months. Employees include full, part-time and temporary employees and employees working for thepractice through a leasing or temporary agency. Part-time and temporary employees are counted the same as full-time. An owner of a practice is considered an employee, so long as the owner works a minimum of 40hours. Generally, employees exclude independent contractors and volunteers.10Special Assets GroupCONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Is My Practice Eligible to Apply? (Continued) Affiliate Rules: When counting the number of employees, a practice must also include all of theemployees of any affiliate. Generally, affiliation exists when one business controls or has thepower to control another. Affiliation with another entity may arise out of:– Ownership;– Stock options, convertible securities or agreements to merge;– Management; or– Identity of interest between close relatives (identical (or substantially identical) business or economic interest) Control may be affirmative or negative control. The ability by a minority shareholder to preventa quorum or otherwise block action by the board of directors or shareholders would beconsidered control. Ultimately, the application of the affiliate rules can be complex and fact intensive, practices needto consider all existing contractual or investment interest of the practice, its owners and theirclose relatives.11Special Assets GroupCONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
How Do I Calculate How Much I Can Borrow? HOW MUCH CAN I BORROW?o Loans can be up to 2.5x the borrower’s average monthly payroll costs, not to exceed 10 milliono Calculation of the maximum loan amount does not equate to the calculation of the maximum forgivable amount HOW DO I CALCULATE MY AVERAGE MONTHLY PAYROLL COSTS?o Average monthly sum of included payroll costs (listed below) from the last 12 months INCLUDED PAYROLL COSTS ARE:oGross wages before deductions for taxes withheld, benefitdeductions per payroll: Salary, wage, commission, or similar compensation Cash tips or equivalents Vacation, parental, family, medical or sick leave EXCLUDED PAYROLL COSTS ARE:oCompensation of employees and owners in excess of 100,000 annuallyoCompensation for employees with a principal place of residence outside ofthe United StatesoTaxes imposed or withheld under Chapters 21, 22 or 24 of IRS Code of 1986 April 2, 2020 Guidance (2 g.iii) – “Federal employment taxes imposed orwithheld between Feb 15, 2020 and June 30, 2020, including employee’s andemployer’s share of FICA and Railroad Retirement Act taxes, and income taxeswithheld from employees Dismissal or separation allowance Payment of state of local taxes assessed on employee compensationoo12Employer portion of group healthcare benefits paymentsRetirement benefits paymentsSpecial Assets GroupoSick leave and family leave wages for which credits are allowed undersections 7001 and 7003 respectively of the Families First CoronavirusResponse ActCONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
How Do I Calculate How Much I Can Borrow? (Continued) SPECIAL TOPICo As an owner of the physician practice, can I include my own compensation in the loan amountcalculations?o If you are an owner who is also a full-time employee of the business who receives wages (salary, wage,commission or similar compensation), your wages, up to the 100,000 maximum per employee, can beincluded in the eligible monthly payroll costs. 13Distributions you receive as an owner of the business are not eligible for inclusion in the monthlypayroll cost amount.Special Assets GroupCONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
How Do I Calculate How Much I Can Borrow? (Continued)Where do I find the information for these calculations?KEY PAYROLL CATEGORIESWHERE THIS INFORMATION IS TYPICALLY LOCATEDPractice P&LIncluded Payroll CostsGross WagesSalary, wage, commission, or similar compensationCash tips or equivalentsVacation, parental, family, medical or sick leaveDismissal or separation allowancePayment of state of local taxes assessed on employee compensationEmployer portion of group healthcare benefits paymentsRetirement benefits paymentsExcluded Payroll CostsCompensation of employees and owners in excess of 100,000 annuallyCompensation for employees with a principal place of residence outside of the United StatesTaxes imposed or withheld under Chapters 21, 22 or 24 of IRS Code of 1986Federal employment taxes including FICA and Railroad taxes and income taxes withheldSick leave and family leave wages for which FFCRA credits are allowedPayroll Register*1099sYESYESYESYESYESYESYESIRS 940,941,944**YESYESOTHER***TPAYESYESYESYESYESYES* Payroll register may be from an independent third-party who is preparing payroll for the practice or from an internal reporting software when payroll is prepared by the practice.Whether payroll is prepared internally or externally, the payroll register should be able to identify wage information by individual and by earning type, including vacation, parental, family, medical or sick leave.** May be requested by the lenders as specific documentation to be provided.*** TPA Third-Party Administrator14Special Assets GroupCONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
How Will Loan Forgiveness Work? What we know:o Loan must be used for payroll costs, mortgage interest, rent and utilities, and not more than25% of the forgiven amount may be for non-payroll costs.o You will also owe money if you do not maintain your staff and payroll or restore it by June 30. Number of Staff: Your loan forgiveness will be reduced if you decrease your full-timeequivalent employee headcount. Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries andwages by more than 25% for any employee that made less than 100,000.Expenses Eligiblefor Forgiveness:Qualified PayrollCostsInterest onMortgages* Re-Hiring: You have until June 30, 2020 to restore headcount and salary levels for anychanges made between February 15, 2020 and April 26, 2020. 15To receive forgiveness you must submit a request to the lender that is servicing the loan andinclude documents that verify the number of full-time equivalent employees and pay rates, as wellas the payments on eligible mortgage, lease, and utility obligations. You must certify that thedocuments are true and that you used the forgiveness amount to keep employees and make eligiblemortgage interest, rent, and utility payments.Rent*Utilities** For obligations incurredbefore February 15, 2020The lender must make a decision on the forgiveness within 60 days, and forgiven indebtednessshall be excluded from gross income for IRS purposes.Special Assets GroupCONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Loan Forgiveness: Key Considerations Additional guidance from the SBA is still needed. Document, document, document o Maintain records for your application calculationso Maintain detailed receipts and records of your expenses during the covered period Keep in mind an amount equal to 75% of the loan proceeds must be paid out in qualifying payroll costsover the 8 weeks following the date of the loan.o If you or any employee has reduced or deferred compensation below the amounts used to calculatethe maximum loan and the deferment continues during the 8 week period, it may reduce your payrollpayments below the 75% threshold for forgiveness 16Amounts not forgiven will remain outstanding as an unsecured loan subject to 1% interest and maturity2 years after the original loan date, with all payments deferred for the first 6 months.Special Assets GroupCONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Case Study Medical Practice of Everywhere, LLCo4 Physician owners with average annual 2019 salary and benefits of 250,000 each (not including owner distributions)o10 full-time employees with average annual 2019 wages and benefits of 60,000 eachoThe practice also has:o Monthly rent and mortgage interest of 10,000 Monthly utilities of 5,000On March 31, 3 staff employees were laid off and 7 reduced pay by 25%, and 4 physicians reduced pay 50%Key topics:o How much can I borrow?o What are eligible costs?o How should I think about loan forgiveness?17PPPCONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Case StudySample Practice (Partnership, LLC or Corporation)MAXIMUM LOAN CALCULATIONEmployeesPhysician OwnersStaffTotal Annual Eligible Payroll CostsNumber of FTEsIndividual Annual PayrollCosts4 250,000 10 60,000 Eligible Payroll Costs100,000 60,000 Divide by 12 for Average Monthly Eligible Payroll Costs Multiply by 2.5 for Maximum Loan Amount FORGIVENESS CALCULATIONSIF WORKFORCE IS RESTORED TO 2019 LEVELS:8 Weeks of 2019 Equivalent Payroll (2019 / 52 Weeks * 8 Weeks)Non-Payroll Costs: Monthly Mortgage Interest (Not Principal), Utilities and Rent8 Weeks of Non-Payroll Costs (8 weeks 56/30.5 Days 1.84 Months)Covered Period Payroll Costs (IF RESTORED)Covered Period Non-Payroll CostsTotal Eligible Payments During Covered Period 153,84615,00027,54184.8% 15.2% 100.0% 153,84627,541181,387Portion Potentially NOT Forgiven if Maximum Loan Accepted 26,946For 100% Forgiveness This Must Be 75%IF APRIL 1 EFFECTIVE PAYROLL REMAINS IN PLACE FOR COVERED PERIOD:Individual Annual PayrollEmployeesNumber of FTEsCostsEligible Payroll CostsPhysician Owners4 125,000 100,000Staff7 45,000 45,000Total Annual Eligible Payroll Costs8 Weeks of April 1 Effective PayrollFor 100% Forgiveness This Must Be 75%80.0%Covered Period Non-Payroll Costs20.0%Total Eligible Payments During Covered Period100.0%Proportional Headcount Reduction (11/14 79%) Further Reduces Potential Forgiveness18PPP2019 Total Eligible PayrollCosts400,000600,0001,000,00083,333208,333 Eligible Payroll 068CONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Key Takeaways for Practices1. Call your bank as soon as possible to determine if they are a PPP lender. If so, apply as fast as possible.2. Begin collecting the necessary information to apply. Discuss with your practice manager. Call your accountant and 3rd party payroll provider (if applicable) to request neededinformation.3. Consult with a lawyer if you have unique eligibility considerations, such as an employeecount around 500, or potential affiliate questions or issues.4. Prepare today for loan forgiveness by keeping documentation of all application calculationsand detailed records of costs incurred during the covered period of the PPP loan.19Special Assets GroupCONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Expert-led Q&A20Special Assets GroupCONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Meet Our PanelistsRob Harris, Partner at Waller LansdenRob Harris is a Partner and the Financial Services Industry Chair at Waller based in Nashville, Tennessee. Robspecializes in commercial finance. His areas of focus include acquisition and development financing, senior andsubordinated credit facilities, double lockbox structures to facilitate healthcare asset-based lending, healthcarecash-flow lending and leveraged recapitalizations.David McMillan, Managing Principal, Consulting Services, PYA, PCDavid leads PYA’s national consulting practice and serves as the firm’s Chief Financial Officer. For nearly threedecades, he has served clients across the country, leading engagements that include strategic planning exercises,merger and acquisition projects, physician-hospital alignment projects, compensation design, and fair marketvaluation services.Debbie Ernsberger, Principal, PYA, PCDebbie has 21 years of experience providing tax planning and review of federal and state returns for healthcareentities, insurance companies, businesses, and tax-exempt organizations. She provides analysis and guidance tohospitals and practices groups on compensation, mergers and acquisitions, and joint ventures, and does duediligence to support them.21Special Assets GroupCONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Questions?Please submit your using the Webex chat feature22CONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Coming Soon!Medicare Acceleratedand Advance PaymentProgram WebinarErik Larsen23Special Assets GroupCONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Closing Remark andNext StepsSandra Morgan24Special Assets GroupCONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Thank you!Access CARES Act, PPP and other COVID-19 resources here, including thefollowing information packets: Paycheck Protection Program SBA Loan Workflow Accelerated and Advance Payment Program Health Care Provider Grant Program The link to the recording is here. Use passcode nGZ39nRh to unlock25CONFIDENTIAL – Contains proprietary information.Not intended for external distribution.
Sandra Morgan, HCA SVP Physician and Provider Relations and Transfer Centers Erik Larsen, HCA VP Special Assets . Plan Overview Special Assets Group. 6 . Payment of any retirement benefits paid in 2019 and 2020 year-to-date To calculate eligible loan amount (Collect all source documentation): To verify forgiveness amount: .
SBA PAYCHECK PROTECTION PROGRAM . APPLICATION PACKAGE . CONTENTS: 1) Types of Employers and Payroll Support Document Checklists 2) Borrower Checklist - Corporate Documents 3) SBA Paycheck Protection Program Application 4) SBA Paycheck Protection Program Application Addendum 5) Borrower
1 Paycheck Protection Program Participation by Tennessee's Food and Beverage Industry, April 3-June 30, 2020 W 958 Paycheck Protection Program Participation by Tennessee's . virus Aid, Relief and Economic Security (CARES) Act was passed by Congress (U.S. Department of Treasury, 2020a). One of these small business assistance programs under .
Understanding Your New Paycheck Rev 4/6/2022 Page 1 of 5 Employee Self-Service (ESS) users will notice some differences when viewing their paycheck (i.e., pay stub) online in Cardinal HCM. Note: For tips on viewing/printing paychecks, see the job aid titled ESS: How to View and Print a Paycheck. Viewing a PDF Paycheck
The overarching focus of the Paycheck Protection Program, a part of the CARES Act, is keeping workers paid and employed, so it prioritizes forgiveness for amounts that go to payroll costs. It also limits the amount of non-payroll costs that can be forgiven to 40 percent of the total
The Paycheck Protection Program - BASICS The Paycheck Protection Program (PPP) will provide small businesses with loans that may be partially or fully forgiven and are 100% federally guaranteed. The program leverages the existing SBA 7(a) lenders and program, while increasing the available
Paycheck Protection Program Loans from HOPE. Brighter Futures Begin with HOPE. Alabama Arkansas Louisiana Mississippi Tennessee Program Overview Congress Authorized This Round of Paycheck Protection Program Funding with Allocations for Hardest Hit Small Businesses and Underserved Segments
Mar 30, 2020 · This application packet is to be used to apply for the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). It includes borrower questions and checklists to ensure your application is complete. In response to the COVID-19 pandemic, the SBA Paycheck Protection Program
Provide an update on the Paycheck Protection Program . deemed acceptable, the application is processed, the Paycheck Protection Program Agreement is entered into : SBA’s : CAFS system and the Lender is notified. PPP - New Lender Application Pr
